Equity Accounting

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DEFINITION of 'Equity Accounting'

A method of accounting whereby a corporation will document a portion of the undistributed profits for an affiliated company in which they own a position.

BREAKING DOWN 'Equity Accounting'

The amount of undistributed profits that the corporation decides to document is generally equal to the percentage of equity it controls. In many cases, the profits of the affiliated company are never distributed to the corporation.

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